Are you someone who analyzes every single thing you do? Do you control every last detail? Do you wonder if eating that apple today would keep the doctor away? Is risk management and risk assessment something that causes happiness rather than dread in your heart?
Well, then wouldn’t you love it if everything you need to know about utility risk management was in one place! Along with all the processes you need to track and control.
Matt A. Chambers has stated that “Measuring risk is about understanding the time horizon, what the consequences may be based on exposure, the relative likelihood of an event occurring and how quickly the consequences will materialize.”
All that needs the right information in the right place. So, let’s break it down for you since you are a risk-averse individual.
What is Utility Risk Management?
Living in this world means you will be exposed to climate change, severe weather, and even macroenvironmental factors that are risky. Even when you go to the mall for shopping, you are putting yourself at risk! A wet floor is the most challenging terrain.
According to the 2019 guidelines, the International Standards Organization (ISO) stated risk strategies for business models to be “coordinated activities.” These activities were meant to direct and control an organization, taking account of risk factors.
It is essential to make risk management practices central to your decision-making for the best grid investment optimization. It is integral to future strategies for an increasingly power-dependent population. It will create and protect value, improve performance, and encourage innovation. It supports the achievement of all your objectives.
That’s precisely what you want. Utility risk management also ensures that the relevant risks are visible. The stakes are graded according to their severity. This way, you know exactly where to concentrate your time and energy.
What are the 7 Risk Management Practices for Utility Companies?
You need to know is how to execute risk management. Of course, you want to know all the fixes. You want to measurably improve system performance. You might be faced with pressure to come up with risk management approaches.
However, you cannot compromise on the reliability of your organization with disruptive and damaging processes or intitiatives. Therefore, you must reduce risk and danger without any potential negative impact on your overall system performance. Here are 7 ways to do that.
- Use Trend Analysis for the Best Results
You can manage your risk management approach using trend analysis. Have a look at the trends of past incidents and use poorly performing ones solely to predict future claims. You can highlight problem areas, this way you can improve risk mitigation and gain reliability improvement.
Let’s take an example. If you find that there is an increased frequency of incidents in one particular area, then mark it. You have now identified a specific problem. You can work on re-orienting risk strategies to determine how to eradicate or mitigate the issue.
That is how you can come up with great solutions to complex problems. However, it will be best to have an effective claim and incident system in place. It will allow you to enter information about the incident in your system quickly.
It works great for traditional risks as well.
- Reporting is King for Risk Managers
Performance detail is crucial. It is vital that you take reports from individuals on their perceived safety. This way, your utility risk managing director can build reports efficiently and disproportionally improve reliability. They can feed the claims, costs, frequency, and other factors into the enterprise risk management program. This way, your own organization won’t have to waste hours manually feeding the information into the right place.
So, effective reporting becomes a significant strategic benefit to your organization. That will also reduce costs for you. It is a simple yet direct edict.
- Build a System Based Safety Culture in Your Organization
You should foster a culture of safety awareness in your organization. Remove all poor-performing circuits. It is one of the best things you can do to reduce high incident and injury rates. Try to create a risk-aware mindset in your employees and equip them with the tools and knowledge to proactively prevent incidents.
The last thing you want is someone taking the wrong actions and putting themselves in unnecessary danger. You can take the following steps to build a good and safe work culture:
- Top management should actively show support
- Ensure that safety is part of everyone’s remit
- Ensure a communicative culture
- Give employees proper training
- Build an effective reporting process
- Celebrate successes
- Build good relationships
That is how you can reduce incidents by creating a safety culture.
Create Crisis and Safety Plans in Advance
Your organization is in the public eye. Hence, it will be under scrutiny from your stakeholders, consumers, and others as well. That is why you should make sure you have a crisis and safety plan for when things go wrong.
Have detailed plans ready in advance. Your risk managers should constantly be checking for potential crisis factors and have a good risk management approach and capital deployment. They should recognize and try to solve them as they crop up.
Keep monitoring for any potential incidents This way, your organization will be ready for any negative event. It will reduce any form of harm to your reputation. You will also shorten your recovery time and reduce potential penalties.
Take into consideration the following factors for the best results:
- Have a permanently-established crisis team
- Make sure you choose your words carefully, especially on social media
- Look at effective and quick recovery methods
- Take any adverse incidents as a learning opportunity
Innovation is Key for Your Risk Managers
In this day and age, you have a lot of options. It would be best to go beyond basic compliance in your organization. It will create a competitive advantage for your electric utilities company. Innovation is important for future success in this way.
As utility providers, you should try to invest in renewable energy, for example. Your managing directors can also use innovative technology to reduce risks in your company. It will create a safer working environment.
You Can Manage Supply Chains Risks
Your organization should try to minimize supply chain risks as much as possible. Otherwise, it might lead to irreversible damage to your reputation and performance. That’s the last thing you want! You do not want to lose the trust of your target audience.
Here’s how you can manage your supply chains in four steps:
- Analyze: Try to understand how goods and resources go from one point to the next. Calculate the risk of each area accordingly.
- Plan: After identifying the problem areas, you should take action. It would help if you planned the likely scenarios that may occur in a given area. Come up with a solution to remove these dangers.
- Strengthen: Try to reduce the dependence on any individual link. You can diversify your supply chains. Practice good communication.
- Monitor: Set up a monitoring system. That will allow you to have transparency in the entire chain. All disruption would be easier to handle.
Try to Stay on Top of Compliance Issues
In the utility industry, official regulations constantly change or evolve. You should try to be aware of any upcoming changes that may affect your regular operations and system average.
Risk managers should regularly research the external environment to mitigate risks. They should make changes accordingly and come up with mitigation strategies. You should try to do better than the minimum level of compliance. That will also create a competitive advantage.
You don’t want your risk managers scrambling.
Electrical Utilities today typically face major emerging risks. They exist in high-level management and on the front line of your operations. These include government regulations, third-party data, wildfire mitigation, complicated cost structures, and consumer expectations alongside concerns. Employees and risk managers who tackle high-risk tasks add negative incidents to their daily work. That doesn’t seem right. You now have all the information to combat these challenges head-on. You should try to take as much advantage as you can of predictive machine learning and artificial intelligence. This way, you can make smarter and better decisions overall.
It will reduce operations costs, as well as maintenance costs. You will improve reliability and minimize problems from any unplanned work. You are helping, not customers, but capitalism if you don’t try to deploy capital in these ways.